Pay down debt, or save as much money as possible?

6 Replies


For the last 5 months or so I have been reading as much about real estate investing as possible, trying to analyze deals in my area and save up as much money as possible; however, I am stuck between trying to pay down debt or make the minimum monthly payment on my loans.  I have student loans (~180/month @ ~4.5% interest) and a small car payment (~$251/month @ 5.4% interest). Do I try to wipe out my car debt with what I have saved so far, delaying my time I enter the real estate investing market?

I appreciate your feedback!


I would pay down the debt, as those debts aren’t generating income for you. You’re not missing anything right now, as most real estate is extremely high at the moment.

I thought alot about this at first as well. I also have student loans and a car payment. I ultimately decided that taking the money I could use to pay off my car would be better spent on house hacking a 3 or 4 unit. Paying the car off saves me $400 per month. Worst case scenario on the multi I live for "free" which saves me my current rent of $700 per month. With 4 units I'm hoping to have a little positive cash flow to add to that. That same amount of money makes me twice as much, gives me a free place to live and gets me into the real estate game. The car can wait. One mans opinion of course. 

I’d at least pay off that car payment, that interest rate seems rather high for a car payment. If you can I’d pay off all that bad debt as it’ll make investing down the road easier since you won’t have any other debt.

Of course this advice would vary depending on the amount of money you owe

I would get your debt paid down or off.  Look at how much money you are losing every year in interest.  That is money you could be saving toward real estate investing.  Plus real estate investing will actually make you money.  Car debt only losses equity and doesn't make you money.  I love Dave Ramsey.  Check out his radio show, check his book out at the library, or take one of his classes in your local area (usually at churches).  His financial advice is life changing.

There's an even worse case scenario when you're broke, your four-plex needs a new roof, and you have vacancy for four months.

Thanks all for the feedback!

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